It's madness as Brown forces non-doms to flee

We've had the reverse on capital gains tax, and now we've got the hole he's dug for himself over non-domiciles. It must have seemed a sound idea at the time, targeting the super-rich foreigners who live here and pay no tax on their overseas earnings. Amid the fury over private equity and its practitioners' mega-earnings, the change to CGT and charging of £30,000 to long-term resident non-domswas naked, populist politics.

It was also Brown, the conviction socialist, putting down a marker. Unlike his predecessor who turned No.10 into a salon for celebrities, Brown was declaring animosity toward the super-wealthy who make little fiscal contribution to our society. I confess to raising a cheer.

Then, I'm not in government. I'm not privy to the true facts and figures. It turns out there are 116,000 of them, and many work in the one area of the economy that is thriving, the City.

Suddenly, the blueprint of Brown and his Chancellor, Alistair Darling, looks less clear. If I'd known what they surely must have known, would I have done the same? No. This threatens the very global pre-eminence the City has fought so hard to achieve. Think I'm exaggerating? All the soundings I've taken and a survey at the weekend from the Society of Trust and Estate Practitioners (or STEP, as it's called), point toward the non-doms quitting in droves.

"For the first time, we can confirm that wealth-generators are preparing to leave the UK in significant numbers," said Keith Johnston of STEP. One problem is the feeling that the levy is being accompanied by a shift in attitude.

Non-doms are going to have to furnish the Revenue with detailed financial information - not just assets here but everywhere, including any overseas trusts they have access to. This is causing widespread anger. The £30,000, they suspect, is the thin end of the wedge.

That would matter less if they didn't have anywhere to go. But we're deluding ourselves if we think they're here because of our schools, transport links, shopping. Other countries have those as well. And they're certainly not in the UK for the weather or Heathrow. They like our island because to them it's a tax haven. Take that away, and they will be off to Geneva, Zurich, Monaco.

Advisory firm Robert Fraser Asset Management has surveyed some of its contacts on the Brown/Darling proposal. This was a private-equity CEO: "I have heard that Zurich and Geneva are campaigning to attract funds, and I think that either would be a sensible and credible place from which to operate. But London is where the clients are, the banks are, the brokers are, the Yanks are - are the changes really so severe people will give all that up and run? I suspect that gradual attrition is more likely."

A Swiss banker didn't hold back: "I am deeply aware of this and rubbing my hands in glee. There is not one person I know who is planning to stay. Only yesterday I was approached by three hedgefund clients who are planning to come here with their businesses. Not one wealthy person I know is planning to stay. In fact, I have a good friend staying with me now plotting his exit from UK and entry in Switzerland. Vive la Suisse! London will die in three to five years."

When Enron collapsed and the US authorities responded with the kneejerk Sarbanes-Oxley, we were smug in our disdain. The overreaction gave the City the final push it needed to supplant New York as world No.1. Now here we are, by all accounts, on the verge of enacting our own Sarbanes-Oxley. It is madness and we will live to regret it.